FARGO — North Dakota once again leads all states in revenue recovery following the Great Recession as it rides stable growth in the Oil Patch even as the farm economy struggles.
Since the peak quarter during the Great Recession, which ran from 2007 to 2009, state tax receipts in North Dakota have risen 71.2% as of the second quarter of 2019, outpacing all other states, according to an analysis by the Pew Charitable Trusts.
North Dakota’s revenue growth was even more impressive as of the end of 2014, when oil prices were soaring, the Oil Patch was booming and state tax receipts skyrocketed 123.9% from their Great Recession peak.
“It’s nice to see we’re in a phase of continued, sustainable growth in all of our revenues,” said Ryan Rauschenberger, state tax commissioner.
Minnesota and South Dakota also were among 45 states where tax revenues rebounded since the recession, and among 16 states that had tax revenue growth exceeding 15%. Tax receipts rose 28.8% in Minnesota and 22.4% in South Dakota.
North Dakota’s healthy tax collections are mainly attributable to oil exploration and production, and the economic activity resulting from them, helping offset the weak farm economy, Rauschenberger said.
The state collects an estimated $250,000 in sales taxes for every oil well that is drilled, for example. Similarly, he said, job expansion from petroleum development spurs income tax growth.
“It’s not just oil revenue that’s growing,” he said. So far this biennium, tax receipts are running ahead of projections made last April.
“Across the board we are ahead of forecast,” Rauschenberger said. “We feel pretty comfortable with where we’re at with our general fund budget.”
On Tuesday, Jan. 7, Rauschenberger’s office announced that taxable sales and purchases for July, August and September of 2019 were $5.852 billion, a 4% increase over those months in 2018.
More than half of state revenues are from oil extraction and production. The state sets aside 30% of those collections in the Legacy Fund, which now exceeds $6 billion. The voter-approved fund contributed $455.2 million to the general fund budget in the 2017-19 biennium.
Oil production reached an average of 1.5 million barrels per day last year, with prices ranging in the $50- to $60-per-barrel range.
“We’re actually collecting more in a month than we were in a year before the Bakken (boom)” when production was less than 200,000 barrels per day, Rauschenberger said.
Last year, when Pew ran an earlier comparison, North Dakota tax revenues had rebounded 58.7% since the peak of the Great Recession, the highest of all states. That compared to a gain of 27.2% for Minnesota and 21.6% for South Dakota.